Business Profits Selling Soap in Rural Kenya
Nuru’s all about sustainability. We want our programs to be self-funding as soon as possible. And there are few things more sustainable than profitable business models. One of the best ideas out there on this is the Living Goods model.
The idea is basically to use Community Health Promoters (CHP’s, not to be confused with CHWs; everyone wants to brand their health workers) to sell health-promoting goods at a small profit. That profit is the incentive to keep them working. Because research has shown that if you don’t pay people, they don’t work for you forever (seriously, people had to research that).
So four weeks ago, we distributed 200 bars of soap to 50 Nuru health reps. The health reps are organized into teams under 7 Field Officers. And because a bit of friendly competition makes people do amazing things, we told them that there’d be a prize for the team that sold the most soap. And just like that, the soap sold like hotcakes! We were sold out in a matter of days, selling at 15/=. The Field Officers complained; more of their members wanted soap and couldn’t get it. So I asked them to write a proposal. They did, and I funded it. This was originally supposed to be a proof-of-concept exercise: giving inventory and getting roughly enough money back to pay for the inventory. But we couldn’t let that kind of demand go to waste, so we bought an additional 400 bars and upped the price to 20/=. If this sold, we would actually be profiting (we bought the soaps originally at 16/=). And they did sell. We’re expecting a profit of about 1000/=.
Sounds great, right? All but one thing: the health reps are friends with all their customers. And friends don’t always have the money to pay for things like soap. But if they say they’re good for it, they’re good for it, right? Well not quite. We made it crystal clear to the Field Officers that they were responsible for returning the soaps or the money for the soaps; these were not gifts. And so some of the Field Officers came to collect money from their health reps who, because of their generously, had given the soap out on credit. The Field Officers told them it was their responsibility to pay for the soap and so they did; those who extended the credit paid from their own money. We debriefed today and we asked about what they’d do differently. “We won’t give them the product until they give us the money.” And they didn’t even need me to lecture them on following our instructions better. By holding 7 people responsible, they hold those below them responsible. Isn’t responsibility amazing?
But why did people buy our soap? Were our never-sold-anything-before farmers that good at selling? Or was this, like the discount flyers, something novel. What’s so novel about that? Well apparently nobody has thought of it yet. The door-to-door salesman is a fresh idea here. People in the villages don’t go into town often. And certainly not often enough to buy soap. But they would use soap if they had it, and would buy it if it were available. And now it is available.
What next? The reps are doing market research this week to find out about products, prices and volumes. And I’m looking for wholesalers to get our prices down lower. We hope that in a few months, we’ll promote the better ones to a paid position (possibly full-fledged government CHW’s). They’ll have other responsibilities beyond the selling, but this could be the mechanism by which they could fund themselves.